This paper can be read in different ways.
An employer and employee related to an institution, which includes a firm and an industry, need to pay an attention to the way of providing an amount of labor force of each worker.
Efficiency is related to the degree of pity and envy as well as the position in the institution of each worker.
To elicit an willingness to provide more effort for an income inequality averse worker, an income structure of an institution should have many steps of incomes and a higher income group who stimulates workers to work harder is necessary.
If the sufficient number of the high income workers exists in an institution at any position of workers, like a reverse pyramid structure, relatively lower skilled workers provide more …show more content…
As regards the tax preference, although income inequality aversion is assumed, it is ambiguous whether voters vote for a higher tax rate than they do under standard preferences.
Because voters with payoff inequality aversion necessarily vote for the higher tax rate, this difference is evident.
Rather, as the income distribution is more distorted and the degree of inequality parameters become severe beyond a boundary, a voter can be more likely to prefer a lower tax rate than in the standard case.
This is an ironic result against the prevalent view that voters prefer a higher tax rate as inequality concern grows.
These results can be easily reconciled with the empirical result that the income share of the richest seems to be less associated with the tax rate of the richest.
To sum up, although the result of this paper should be carefully understood to interpret the role of the tax mechanism on income inequality, it might be time to start discussion of a new way or paradigm based on intrinsic human characteristics beyond a tax mechanism in
An employer and employee related to an institution, which includes a firm and an industry, need to pay an attention to the way of providing an amount of labor force of each worker.
Efficiency is related to the degree of pity and envy as well as the position in the institution of each worker.
To elicit an willingness to provide more effort for an income inequality averse worker, an income structure of an institution should have many steps of incomes and a higher income group who stimulates workers to work harder is necessary.
If the sufficient number of the high income workers exists in an institution at any position of workers, like a reverse pyramid structure, relatively lower skilled workers provide more …show more content…
As regards the tax preference, although income inequality aversion is assumed, it is ambiguous whether voters vote for a higher tax rate than they do under standard preferences.
Because voters with payoff inequality aversion necessarily vote for the higher tax rate, this difference is evident.
Rather, as the income distribution is more distorted and the degree of inequality parameters become severe beyond a boundary, a voter can be more likely to prefer a lower tax rate than in the standard case.
This is an ironic result against the prevalent view that voters prefer a higher tax rate as inequality concern grows.
These results can be easily reconciled with the empirical result that the income share of the richest seems to be less associated with the tax rate of the richest.
To sum up, although the result of this paper should be carefully understood to interpret the role of the tax mechanism on income inequality, it might be time to start discussion of a new way or paradigm based on intrinsic human characteristics beyond a tax mechanism in